The shampoo effectThe supplies package for workers at the Kaesong Industrial Complex from the South used to include protective clothing and gloves. Now, it has become more of a care package that includes snacks, instant noodles, toothpaste, toothbrushes and spices.
Lately, the most popular item is KeraSys shampoo. Companies in the joint industrial park in the North provide each worker with products worth $60 to $80, and workers take several boxes of shampoo. A company head wondered why the male workers needed so much shampoo. He found that the shampoo is being sold to a distributor outside of the complex to be resold at markets in Pyongyang.
The Korean shampoo is mostly bought by the privileged in Pyongyang. While the shampoo comes through the North Korea-China border as well, buyers are worried about fake products from the Chinese distribution network. The products that come through the Kaesong Industrial Complex are considered more trustworthy.
Inter-Korean ties have been frozen for eight years, and while few human exchanges are made, the necessities appear to flow through the small veins of supply and demand. More than 50,000 workers are employed at the complex, and at least $3 million worth of supply packages are sent every month, not a negligible amount.
In the 1960s and ’70s, fishermen hired by Taiwanese and Chinese merchants traded necessities like thermos flasks and toothpaste for fishery products in the waters near Fujian province.
While the three Cross-Strait links - transportation, commerce and communications - were severed in the ’80s, black market dealings for necessities was legalized. A small market was set up in Dadeng Island in Xiamen, not far from Kinmen Island.
The Dadeng trade market was a sort of frontier trade and in 1995, it became the Taiwan Small Goods Trade Market. Fresh food and manufactured products imported to Taiwan are traded as much as 30 percent lower than the black market price. As the supply and demand for necessities benefited both China and Taiwan, Cross-Strait tensions began to thaw.
Taiwan feared and rejected reunification by absorption and refused the three links in order not to be taken into the centrifugal force of China, but China started allowing commercial trade with Taiwan and expanded to exchanges and cooperation of 10 million people visiting each other. The changes have been induced through contacts with a long-term view of over 40 years.
It is too early to analyze the shock of KeraSys shampoo on North Korea, but the demand of the market is expanding to high-end products, and diversification is certainly a sign of dynamic change.
We have many islands of opportunity. In addition to Yeonpyeong Island, Cheongjubeol in Gyodong Island in Ganghwa, offers a site for inter-Korean trade of agricultural and fishery products and necessities. Korea is caught in the quagmire of sluggish growth, and North Korea is a new growth engine and another domestic market for Korea in the future. Grand special economic zones or railway infrastructures are not the only breakthroughs. Cross-Strait development began from markets.
*The author is a deputy political news editor at JTBC.
JoongAng Ilbo, Aug. 6, Page 34
by CHEONG YONG-WHAN